All young companies eventually face a dilemma: how do you convince major customers to commit vital aspects of their product development worth many millions of dollars when you are venture capital-backed with only nascent income streams?
That was the dilemma we faced earlier this year at Alphamosaic, which I co-founded in 2001 with Steve Barlow after our work on the development of the Orange videophone.
While working on that project, we recognised that the major impediment to the development of mobile technology was the tension between power consumption and the delivery of top-quality content. Customers would be resistant to poor quality images delivered by small batteries, just as they would be by high-quality content powered by oversize battery packs. Miniaturisation coupled with quality and mean power demand was the conundrum the industry faced.
With VC backing we put together a small team with the intention of developing a multimedia processor that would offer the mobile industry a solution to that seemingly intractable problem, and potentially open up a multi-million dollar business opportunity.
During 2001 we expanded and were joined by Jalal Bagherli from Sony Semiconductor and Devices.
Further funding followed, and in November 2002, Alphamosaic announced the commercial availability of VideoCore, the breakthrough we were seeking. For the first time the industry had access to technology that would satisfy the requirement for low power, top-end quality content on mobile devices.
Later that year, we announced the launch of our first multimedia processor, VC01. The solution to the problem that we set out to solve 15 months earlier was now a commercial reality.
It didn’t take the industry long to realise the significance of the breakthrough. Within a year, Samsung had adopted VC01 as its multimedia processor for a range of phones, the first of which was launched in Korea this January.
Tokyo FM incorporated VC01 into mobile phones to trial the delivery of digital television to consumers, and Alphamosaic captured the attention of the mobile industry by showcasing high quality 3D games.
With all this activity, it was inevitable that Alphamosaic would attract potential purchasers. In fact, it is taken as fact that VC backers, who had invested some $35m (£19m) into the company (not a large amount to bring a fabless semiconductor firm to maturity) would be looking at exit options about the three to five-year mark.
And this September Broadcom of California acquired Alphamosaic in a $120m (£64m) deal that had immediate benefits for both parties.
For Broadcom, VC01 and VC02 matched perfectly its own portfolio of semiconductor products.
For Alphamosaic the immediate consequence was commercial credibility. Overnight the dilemma I spoke of at the start of this column was resolved. Alphamosaic is now part of Broadcom’s Mobile & Wireless business, a leading provider of highly integrated semiconductor solutions enabling broadband communications, and is free to concentrate on developing multi-media processors for next-generation mobile devices – what we wanted to do all along.
Dr. Robert Swann is co-founder of Alphamosaic.